While the global electric vehicle (EV) market is on the cusp of exponential growth in the wake of a big push by governments worldwide, car makers may encounter bumpy roads ahead, according to a report. The EV thrust must be read in the context of efforts by governments and city authorities to replace internal combustion engine vehicles (ICEVs) with cleaner alternatives.
“As car makers gear up to electrify their fleets, they face challenges to secure supplies of raw materials used for battery production and to prove the environmental benefits of a lifecycle perspective,” according to a report by independent research organisation A.T. Kearney Energy Transition Institute. “Electric car batteries rely on a host of rare materials – from lithium and nickel to cobalt. Battery makers around the world are struggling to secure supplies of these key ingredients as demand outstrips supply. This, undoubtedly, places pressure on car-makers. So, the hunt for alternative technologies is on,” Romain Debarre, managing director, A.T. Kearney Energy Transition Institute, said in a release.
Practical aspects
“It is critical that India takes into account the practical aspects related to the EV roll-out, as it defines its long-term strategy for the sector. The problem is further complicated by the fact that we have limited availability of the natural resources required for LIB (lithium-in battery) battery manufacturing,” said Abhishek Poddar, partner, Energy & Process Industries, A.T Kearney India. Not surprisingly, in the latest automotive policy, the Centre had focussed on overall pollution reduction through multiple technologies and regulations by implementing stiff targets, and by not demanding 100% switch to EV by 2030.
According to the report, cobalt, particularly, is in short supply globally and reserves could be depleted completely by the time 300 million EVs are produced – a modest proportion compared to the 1.2 billion cars on roads today.
“Since 2013, global lithium production has risen 7% a year. We estimate miners need to accelerate production to more than 9% a year to keep up with the demand,” the report said. Rising demand and tight supplies had also led to price increases, it added. In 2015, prices in most markets rose by 40-60%. In the same year, the price in China trebled, the report said.
“The challenging natural resource shortage is further exacerbated by a lack of viable and cost-effective reuse and recycling options for electric car batteries,” Mr. Romain added. “By 2025, the economics of recycling is likely to improve as used batteries become more commonplace and second-hand batteries take root,” the report said.
